A healthy business starts with True North Accounting. And if you’re a self-employed health professional or run a healthcare company, you have a demanding career with many important decisions and regulations to consider:
- Should you become a professional corporation or remain a sole proprietor?
- How should you pay yourself? What are the pros/cons of dividends or wages?
- What EMR app makes the most sense for you or your company?
Corporation or sole proprietor?
When you start independently as a self-employed professional, sole proprietor is the default category. There is no separation between you and your business – you are your business and report your business income on your personal tax return.
When you incorporate as a healthcare business, you create a legal entity that is separate from you: a corporation. A corporation makes its own money, owns its own assets, is responsible for its own liabilities and pays its own taxes. The corporation operates the business, earns the income and then pays you.
The decision to incorporate may depend on the stage you’re in – whether you’ve recently finished school or have a lot of debt. For example, setting up a professional corporation can save you taxes in the long run. Your accountant can help you figure out the right path.
Read the pros and cons of sole proprietorship vs. incorporation in our blog.
Dividends vs. wages
When you incorporate, you can get paid either as an employee of your corporation (wages) or as a shareholder/owner of your corporation (dividends).
When you pay yourself in dividends, you’re being paid out from the business's profit as a shareholder or an owner of the corporation. The corporation issues T5 slips to the owners, showing the dividends paid in a year. The figures from the T5 are then used to calculate the tax owed on your personal tax return.
If you decide to pay yourself a salary (or a wage), you’re paid as an employee of your own business. You may be put on a regular payroll or receive a one-off bonus. The corporation issues you a T4 slip indicating your annual wages.
Should you pay yourself a salary or dividends? Let us run the numbers for you.
Personal services businesses
The CRA may designate you a personal services business (PSB) if you are incorporated but only have one client and your work arrangement looks very similar to an employee's. Or if you’re an incorporated contractor and have worked for the same company for over a year.
Why does this matter? You could lose your small business deduction, increase your tax rate and no longer get to deduct business expenses. You may also get charged with penalties and interest.
Learn more about personal services businesses.
EMR apps
Healthcare providers use electronic medical records (EMRs) as digital versions of paper-based medical records. By using an electronic medical record, doctors, nurses and other healthcare professionals can securely store and access patient information, including their medical history, diagnoses, medications and test results. Here are the main EMR apps that are used in Canada:
TELUS Collaborative Health Record (CHR): CHR has been officially recognized as a certified platform by the province of Alberta. A cloud-based solution with a full suite of tools for collaboration, patient engagement, automation and data optimization.
Accuro EMR: Includes medical billing software, letter generation, data analytics and clinic reporting.
TELUS Med Access EMR: Designed for primary care physicians and specialists, Med Access is a highly configurable EMR that adapts to your clinic, user and workflow needs. This web-based solution offers robust reporting, powerful task management, point-of-care decision support and convenient remote access.
Ava EMR: Ava is owned and operated by physicians. Ava EMR Promises a faster, simpler and more intuitive platform.
Starting your own clinic and trying to decide which app to use? Come chat with us.
By accessing your practice’s EMR information, your accountant can help you determine financial data, such as patients billed vs. how much your practice was paid.
Banking
Most Canadian banks offer specific advice and offers for medical students, doctors and dentists. Shop around and see which offers the best accounts and products for your needs:
- BMO: Physicians, dentists and medical/dental students
- CIBC: CIBC Medical, Dental and Optometry Student Banking Bundle
- RBC Healthcare: Specialized advice and support
- Scotiabank: Banking advice and solutions for medical students
- TD: Financial services for healthcare practitioners
- TD Bank Healthcare Practice Solutions Group: Banking solutions for your healthcare practice
GST implications
Most services provided by physicians and doctors are exempt from GST.
Medical services are GST-exempt when consultative, diagnostic, or treatment health care services. This could include medical assessments, prescription renewals, preparation and transfer of medical records and medical reports.
If the primary purpose of a healthcare service is NOT to protect, maintain or restore health, they are considered a GST-taxable supply. These could include cosmetic surgical procedures, annual fees, witness fees for court appearances, expert opinion reports, medical-legal reports, CPP disability reports, preparing certificates and other services.
Which services are GST-exempt? Come chat with us.
Information protection
The Personal Information Protection Act (PIPA) is Alberta’s private sector privacy law for provincially regulated private sector organizations, businesses and sometimes non-profit organizations.
Brightsquid offers expert privacy compliance support for health businesses.
Healthcare professionals and patients in Alberta exchange over 50,000 Brightsquid Secure-Mail messages a month. Secure-Mail is the only secure messaging service connected to MyHealth Records.
Secure-Mail is also integrated into the TELUS Health EMRs installed in 70% of the medical clinics in Alberta.
Building a healthcare business
We’ve included other helpful tips and resources for building a healthcare business:
- National Research Council of Canada Industrial Research Assistance Program - Apply for support for technology innovation.
- Business resources for Alberta health professionals - Healthcare business processes, fees, forms, billing and claims systems and other resources for health professionals.
True North Accounting is a partner you can count on for everything from bookkeeping and accounting to GST filing, deductions and tax returns. You take care of your practice, and we’ll take care of you.
See who we work with and the plans we offer to healthcare professionals.
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